Trade, Not Giveaway

April 12, 1954

Much in the President’s recommendations on foreign economic policy is thoroughly sound and should receive the full support of Congress.

This applies to his plea for a three-year extension of the trade-agreements act which would authorize him to reduce present tariff rates, in trade-agreement negotiations, by 5 percent a year during the next three years; to reduce tariff rates by not more than one half of rates in effect Jan. 1, 1945, on products not being imported or being imported in negligible amounts; and to reduce, over a three-year period, to 50 percent ad valorem, or its equivalent, any rate in excess of that ceiling.

These are moderate objectives. They are the recommendations of the Randall commission. One of the assurances to which European exporters are surely entitled is that if they plan to sell in the American market, and can successfully do so, we will not suddenly start to increase the barriers against them. Legislation permitting further tariff reductions will help to give this assurance.

For the same reason Congress should accept Mr. Eisenhower’s proposal exempting from provisions of the so-called Buy America acts bidders from nations that treat our bidders on an equal basis with their own.

Another welcome statement in Mr. Eisenhower’s message is that “economic aid cannot be continued indefinitely. . . . [Such aid] on a grant basis should be terminated as soon as possible . . . [and] to the maximum extent appropriate should be in the form of loans.” It is unfortunate that the President did not see fit to apply this principle to military aid also. The contention of European governments that they cannot afford to pay for their own armament programs will not stand serious analysis.

Unfortunately, other parts of the President’s foreign economic program are not as sound as his proposals for lowering tariff barriers and reducing the dimensions and cost of the giveaway program. He approves, for example, the Randall commission’s recommendations “that the United States withhold reductions in tariffs on products made by workers receiving wages which are substandard in the exporting country.” This proposal is wholly objectionable. The question of what wages are “substandard” by another country’s standards is a matter of arbitrary opinion. We could not determine the facts about wages in a foreign country unless we insisted that our own snoopers be allowed to enter it and investigate. The proposal would breed backdoor efforts to keep protectionism under the pretense of deep concern for the welfare of the workers whose products we discriminated against.

The President also asks for excessive discriminations in favor of foreign investment. Such discriminations would have the effect of increasing the tax burdens on domestic investment. It is one thing to argue that there should be no discrimination against foreign trade and investment. It is quite another thing to argue that investment in foreign countries is better for us than investment in our own. This is untrue. And rather than expand, at the taxpayers’ expense, government guarantees of bad private foreign loans, no further guarantees should be offered.

The Export-Import Bank should not finance foreign-development projects. It is more than doubtful, in fact, that it should continue to exist. And there is certainly no reason why our government should grant still more loans to foreign governments to make their currencies convertible when they could achieve that end simply by ceasing to forbid convertibility.

Mr. Eisenhower declares that the foreign economic policy he presents is an interrelated whole in which each part “requires the other.” But even if we pass over his failure to ask for repeal of import quotas, several of his leading recommendations are quite inconsistent with each other. Lower and simpler tariffs make for greater freedom and trade. More and bigger giveaway programs make for inflation or heavier tax burdens at home and more statism everywhere. The President should not imperil what is sound in his program by tying it to what is dubious.